It has been a relatively solid week of strength for the AUD, despite there being rather minor economic data being released. As anticipated, the release of the Australian Federal Budget had little effect on the currency market Tuesday night although the Aussie did experience a mid-week rally against most of the majors before softening slightly overnight.
It was a big night of data out of the Euro-Zone last night with the release of both Gross Domestic Product and Consumer Price Index figures. The CPI figure was expected to be low at 0.7% and it was exactly as anticipated. The GDP figures were a miss for both the quarterly and year on figures, coming in at 0.2% and 0.9% respectively. This week appears to have shown us that the first definitive signs of a medium-long term lower Euro are being realised. The Head of the European Central Bank, Mario Draghi, continues to re-enforce that aggressive monetary policy will be utilised in order to devalue the currency. Tonight the Euro-Zone Trade Balance figure for March will be announced, which is expected to increase from 13.6 Billion to 16.0 Billion.
Inflation data out of the US was also released last night. The economic consensus was that it would increase from 1.5% to 2%. It performed to economic expectations, posting a result of 2% and allowing the Greenback to gather back some ground against the Aussie.
It is looking like it will be a sleepy start to next week’s currency market, with much of the significant economic data being released Tuesday afternoon and onwards. UK data will be at the focal point for much of next week the Bank of England Minutes, GDP and CPI figures all likely to impact the strength of the Aussie Dollar to the Pound. Economists will also keen a keen eye on Euro-Zone Manufacturing and Services PMI release next week to see if there is any resistance to the downward pressure on the Euro. With the AUD to EUR trading close to a 6 month high, the current upward trend seems set to continue.